Suppose the Marginal Product of Labor Is 10 and the Marginal

question 157

Multiple Choice

Suppose the marginal product of labor is 10 and the marginal product of capital is 8. If the wage rate is $5 and the price of capital is $2, then in order to minimize costs the firm should use:

• A) more capital and less labor.
• B) more labor and less capital.
• C) equal amounts of labor and capital.
• D) None of the statements is correct.

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Definitions:

Available-for-Sale Securities

Financial assets such as stocks or bonds that are bought and held primarily for sale in the near term to generate income on short-term price differences.

Trading Securities

Short-term investments in debt or equity securities that a company intends to sell within a short period to generate profits on short-term price differences.

Comprehensive Income

Total non-owner changes in equity for a reporting period, which includes all recognized income and expenses, including those not included in the net income.

Unrealized Gain

The increase in value of an asset or investment that has not yet been sold for cash, and thus, the gain is not yet realized.